Money & Banking

YES Bank’s AT1 bondholders seek shares in lieu of written-down bonds

Our Bureau Mumbai | Updated on March 12, 2020 Published on March 12, 2020

Willing to take 80% haircut; in negotiations with RBI via debenture trustee

A large number of additional tier 1 (AT1) bondholders of YES Bank have approached the RBI, asking it to allot them equity shares of the beleaguered bank, with an about 80 per cent haircut on the face value of their bonds.

“The majority bondholders of the AT1 bonds have suggested that about 170 crore shares be allotted to the existing AT1 holders in proportion to their current holding of these bonds,” sources said. Axis Trustees Services Ltd is acting as the debenture trustee for these bondholders and has begun negotiations with the RBI.

It has proposed an imputed value of ₹10 per share, which would give the bondholders shares worth about ₹1,700 crore, helping them salvage about 20 per cent of their principal outstanding.

If the proposal is accepted, the majority of bondholders will not pursue legal recourse, it added.

The proposal comes after the RBI’s draft reconstruction scheme for YES Bank suggested permanently writing down AT1 bonds.

Objecting to the proposal, Axis Trustees Services had filed a writ petition with the Bombay High Court against the government, RBI and YES Bank.

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Published on March 12, 2020
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